Multi Jurisdictional Management and Execution of the MDBP

The Victorian Farmers Federation (VFF) welcomes the opportunity to provide comment to the Senate Select Committee on the Multi Jurisdictional Management and Execution of the Murray Darling Basin Plan.

Northern Victoria is the Foodbowl of Australia producing much of the nation’s food and exports. Northern Victoria alone produces:

  • 25% of the Nation’s milk with 9 major milk processing factories and over 8000 jobs on farm and in processing
  • 90% of Australia’s pears
  • 40% of Australia’s apples
  • 40% of Australia’s stonefruit
  • 68% of Australia’s almonds
  • 99% of Australia’s tomatoes for processing
  • Significant cropping and livestock

This agricultural production is only possible because of the stable water resource management arrangements established by the Murray-Darling Basin Agreement and Victoria’s water entitlement and allocation framework. Under this framework, Victorian irrigators own water shares that have very strong property right attributes that are not subject to the whims of bureaucrats or politicians. They provide the certainty and confidence needed by the private sector to invest in high value irrigated agriculture and the reliability of supply required by irrigation enterprises that depend on uninterrupted supplies.

Carryover arrangements provide a vital mechanism for irrigators to manage seasonal variability in water supplies and the water market provides a mechanism to transfer water between users.

The Basin Plan has seriously undermined investors’ confidence and has significantly curtailed the economic growth of the sector. Opportunities to supply the growing food demands of Asia have been stunted curtailing regional development and prosperity.

Responsibilities in the Management and Execution of the Murray Darling Basin Plan

Victoria, New South Wales and South Australia first agreed to cede certain powers to manage the Murray River to an interstate agency, the River Murray Commission in 1914. The Commission harnessed the interests of the states rather than threatening them. The Agreement shared the available water of the Murray between the States and arrangements to invest and operate the storages and weirs required to utilise these water resources. 

The heads of State irrigation bodies were normally the State Commissioners of the River Murray Commission. State agencies undertook construction and operation functions under the terms of the Agreement rather than the surrender of these functions to an inter-state bureaucracy. 

The ceding of overlapping jurisdiction to an inter-state agency was always perceived as not only raising sovereignty issues but also complex issues of day to day administrative jurisdiction. The rigid discipline applied in the Agreement enhanced functional separability and simplified decision making for most purposes. Accountabilities were clear and the opportunities for the blame shifting which is so prevalent today were minimised. 

This demonstrably robust structure depended on a hierarchical allocation of power and resources which enabled most decisions and policies to be made by the States. These arrangements were somewhat expanded in 1987 when the Murray-Darling Basin Ministerial Council was established with the expanded function of considering shared land, water and environmental matters not covered by the Agreement. 

The modest investment in joint control subsequently allowed the River to be managed with little serious conflict until 2007, a period of 106 years. The arrangement was one of the best examples of Australia’ cooperative federalism in action and was used as a model for other river systems that crossed jurisdictional boundaries (e.g. the Mekong River). The arrangements successfully delivered potentially contentions inter jurisdictional initiatives to control the salinity of the Murray, cap water diversions in the Murray-Darling Basin and enhance Murray wetlands through the Living Murray initiative. The arrangements were also effective in managing the severe water shortages during the Millennium drought. 

The Commonwealth Water Act 2007 ignored this inconvenient history and disrupted these proven arrangements. The disciplined hierarchical structure has been lost. Accountabilities have been duplicated and confused. Clear functional responsibilities have been replaced by bureaucratic coordination. All too often the Commonwealth blames the States or the States blame the Commonwealth for issues that remain unresolved. 

The South Australian Royal Commission observed that: 

“our Federal constitutional distribution of legislative powers, for better or for worse we have set out to render the project of rehabilitating the Basin’s water resources enforceable and thereby effective, by a combination of intergovernmental agreements, Commonwealth external affairs powers and the tightly controlled referral of State powers to the Commonwealth — along with a welter of standing arrangements for inter-jurisdictional liaison and decision-making. In the absence of utterly unrealistic change to our Commonwealth Constitution by referendum, this very Australian framework of governance will remain, faute de mieux. The cheerful term for it is ‘co-operative federalism’ ” 

The solution to the problems of the Basin Plan is not to expand Commonwealth powers but rather to go back to the elegant design of our forefathers based on clear hierarchical organisations where the inter-jurisdictional agency focuses on the few elements that require joint control leaving separate and independent control of the multitude of subordinate elements to the States. 

Summary of Recommendations

Recommendation 1: The Senate Committee avoid further centralisation of powers in Canberra and instead re-establish a hierarchical allocation of power and resources that focus the MDBA’s attention on matters requiring joint control leaving separate and independent control of the multitude of subordinate elements to the States .

Recommendation 2: That the Senate Committee reform the MDBA by placing its service delivery function of operating the Murray River in accordance with Murray-Darling Basin Agreement in to a separate independent entity that is operated along business rather than bureaucratic lines.

Recommendation 3: That the Senate Committee must view any discussion of the execution and management of the Basin Plan through a lens that balances social, economic and environmental outcomes.

Recommendation 4: That the Senate Committee acknowledges the 5% SDL adjustment limit should be removed or increased to at least 6% to maximise environmental outcomes for least cost.

Recommendation 5: The Senate Committee acknowledge environmental impacts in Northern Victoria caused by increased environtal demand and water trade and ensure sufficient protections are established.

Recommendation 6: The Senate Committee expand the focus of river health to include physical form, streamside zone, water quality and aquatic life of our river system.

Recommendation 7: The Senate Committee ensure the water market is transparent and working in the best interests of irrigated agriculture to maximise returns on the water used to grow food and fibre and to promote water efficiency.

Recommendation 8: The Senate Committee review Section 46 of the Competition and Consumer Act (2010) misuse of market power provision and apply to the water market.

Recommendation 9: The Senate Committee investigate the depth of the water allocation market and potential excessive market power.

Recommendation 10: The Senate Committee ensure the Australia Tax Office’s information on foreign ownership of water is merged with water market information more broadly.

Recommendation 11: The Senate Committee review Clause 12.23 of the Basin Plan Act as it risks third party impacts and environmental damage.

Recommendation 12: The Senate Committee ensure the best available science is released regarding the Lower Lakes.

Recommendation 13: The Senate Committee acknowledge the existing powers available to the Commonwealth and examine how they are being utilised before calling for any expanded powers.

Recommendation 14: The Senate Committee acknowledge duplication of roles through the creation of the Inspector General role.

Recommendation 15: The Senate Committee acknowledge that certain agricultural industries have developed in various states given the water productions and allocation framework available to them.

Recommendation 16: The Senate Committee ensure robust monitoring is actually implemented and metering in the northern Basin is urgently implemented.

Recommendation 17: The Senate Committee ensure the Government make a greater effort to actively adapt and acknowledge the real problems with the Basin Plan and make some real changes.